A South Carolina staffing buyer is a joint employer in a sexual harassment lawsuit brought by a temporary agency worker under a “hybrid test” put forward by the US Fourth Circuit Court of Appeals. The opinion issued July 15 in Butler v. Drive Automotive by the Fourth Circuit reverses an April 2013 ruling by a lower court to dismiss the case.

In 2013, the lower court found the staffing buyer didn’t exercise sufficient control over the temporary worker to be considered an employer. Now the case goes back to the lower court.

The hybrid test used by the Fourth Circuit is similar to tests aimed at finding whether a worker is an independent contractor or employee. It borrows from the “economic realities test,” which focuses on degree of economic dependence of alleged employees on a business, and the “control test,” which looks at factors such as the right to hire and fire.

In its opinion, the Fourth Circuit spelled out a list of factors to determine whether a firm is the joint employer of a worker, including:

  1. Authority to hire and fire individual.
  2. Day-to-day supervision of the individual, including employee discipline.
  3. Whether the putative employer furnishes the equipment used and the place of work.
  4. Possession of and responsibility over the individual’s employment records, including payroll, insurance and taxes.
  5. The length of time during which the individual has worked for the putative employer.
  6. Whether the putative employer provides the individual with formal or informal training.
  7. Whether the individual’s duties are akin to a regular employee’s duties.
  8. Whether the individual is assigned solely to the putative employer.
  9. Whether the individual and putative employer intended to enter into an employment relationship.

None of the factors are dispositive, but the first three are the most important factors, according to the Fourth Circuit.

The case in question involves Brenda Butler, a temporary worker who said she was sexually harassed by her supervisor, John Green, at a Drive Automotive Industries auto parts factory in Piedmont, SC, according to court records. Butler worked on site at the factory but was employed by staffing firm ResourceMFG.

Butler filed suit in November 2012 against Drive and ResourceMFG. However, both parties agreed to dismiss the case against the staffing firm prior to the lower court’s dismissal of the case against Drive in April 2013.

In its opinion overruling the lower court, the Fourth Circuit said:

  • A Drive employee asked ResourceMFG that Butler be added to a list of workers to be replaced and ResourceMFG terminated Butler.
  • Drive employees supervised both staffing firm employees and directly hired workers.
  • Temporary workers and directly hired workers performed the same tasks and worked side-by-side.
  • Butler’s labor was not tangential or peripheral to Drive and produced goods that were Drive’s core business.

“The hybrid test, as we have articulated it, specifically aims to pierce the legal formalities of an employment relationship to determine the loci of effective control over an employee, while not discounting those formalities entirely,” according to the opinion. “Otherwise, an employer who exercises actual control could avoid Title VII liability by hiding behind another entity. Here, although ResourceMFG disbursed Butler’s paychecks, officially terminated her, and handled employee discipline, it did not prevent Drive from having a substantial degree of control over the circumstances of Butler’s employment.”

“The opinion of the Fourth Circuit does not change the legal position but indicates that the test in determining joint employment is broader than either the ‘control test’ or the ‘economic realities test.’ However, each case will turn on its own facts and the list of factors set out by the court provides a useful checklist for staffing buyers to assess their potential liability,” said Fiona Coombe, director of Legal and Regulatory Research at Staffing Industry Analysts.